Federal and state environmental laws provide that the owner of real property is liable for cleanup of property contamination and define who is the owner of such property. If a borrower defaults on a loan, a lender must decide whether to foreclose and potentially become the owner. For fear of becoming liable for conditions they did not create, lenders are showing a reluctance to foreclose, thus leaving no one responsible for the cleanup. So that lenders can predict with more certainty what their costs will be when they foreclose, it is the intent of the general assembly to limit third-party liability for lenders who comply with certain conditions to the cost of cleaning up contaminants or pollution pursuant to federal, state, and local laws. In addition such limitations may also make lenders more willing to lend to certain types of businesses.
Source: L. 90: Entire part added, p. 865, § 2, effective July 1.